EX-99.1 2 a8kexhibit99109302015q110q.htm KIMBALL ELECTRONICS, INC. EXHIBIT 99.1 Exhibit


Exhibit 99.1
KIMBALL ELECTRONICS, INC. REPORTS FIRST QUARTER FISCAL YEAR 2016 RESULTS
JASPER, IN (November 5, 2015) - Kimball Electronics, Inc. (Nasdaq: KE), a leading global electronic manufacturing services provider of high-quality, durable electronic products, today announced financial results for its first quarter of fiscal year 2016 which ended September 30, 2015. 

 
Three Months Ended
 
September 30,
(Amounts in Thousands, except EPS)
2015
 
2014
Net Sales
$
200,418

 
$
203,803

Operating Income
$
6,921

 
$
7,787

Adjusted Operating Income (non-GAAP)
$
7,058

 
$
8,751

Operating Income %
3.5
%
 
3.8
%
Adjusted Operating Income (non-GAAP) %
3.5
%
 
4.3
%
Net Income
$
4,475

 
$
5,391

Adjusted Net Income (non-GAAP)
$
4,560

 
$
6,355

Diluted EPS
$
0.15

 
$
0.18

Adjusted Diluted EPS (non-GAAP)
$
0.16

 
$
0.22


Donald D. Charron, Chairman and Chief Executive Officer, stated, “The softness that we felt in the fourth quarter of fiscal year 2015 continued into the first quarter of fiscal year 2016.  We were, however, encouraged by the firmer demand that we began to see at the end of the quarter.  We are focused on the successful launch of a number of new business awards with both existing and new customers.  Our new business opportunities pipeline remains healthy, and we continue to work diligently to achieve our medium range goal of $1 billion in annual sales by fiscal year 2018.”

Mr. Charron continued, “This has been a challenging quarter for us.  In addition to the slowing China automotive market, incremental costs related to the Romania greenfield start-up, the ramp up of a significant new product introduction, and foreign exchange headwinds impacted our results.  We remain committed to our four percent operating income goal and are responding with the appropriate short-term actions while maintaining alignment with our long-term strategic plan.”

First Quarter Fiscal Year 2016 Overview:
•
Net sales declined 2% from the prior year first quarter due, in part, to a $12.9 million reduction related to the exit of Johnson ControIs, Inc. compared to the same quarter last year.
•
Spin-off expenses in the current year first quarter were $0.1 million. Prior year first quarter spin-off costs were $1.0 million.
•
Incremental costs associated with the start-up of the Company’s new Romania facility reduced net income by $0.3 million in the fiscal year 2016 first quarter.
•
Investments in capital expenditures were $11.3 million during the three months ended September 30, 2015.
•
Cash and cash equivalents at September 30, 2015 were $52.7 million.
•
Days sales outstanding, calculated as the average of monthly trade accounts and notes receivable divided by one day’s average net sales, was 58.7 days for the three months ended September 30, 2015 compared to 57.4 days for the three months ended September 30, 2014.
•
Production days supply on hand, defined as the average of the monthly gross inventory divided by an average day’s cost of sales, was 65.2 days for the current year first quarter compared to 59.7 days for the same period a year ago.






Net Sales by Vertical Market:

Three Months Ended
 
 
 
September 30,
 
 
(Amounts in Millions)
2015
 
2014
 
Percent Change
Automotive
$
72.0

 
$
71.2

 
1
%
Medical
58.5

 
61.6

 
(5
)%
Industrial
49.5

 
53.6

 
(8
)%
Public Safety
16.4

 
14.2

 
16
%
Other
4.0

 
3.2

 
26
%
    Total Net Sales
$
200.4

 
$
203.8

 
(2
)%


Forward-Looking Statements
Certain statements contained within this release are considered forward-looking under the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties including, but not limited to, our ability to fully realize the expected benefits of the completed spin-off, the global economic conditions, significant volume reductions from key contract customers, loss of key customers or suppliers, financial stability of key customers and suppliers, availability or cost of raw materials, and increased competitive pricing pressures reflecting excess industry capacities. Additional cautionary statements regarding other risk factors that could have an effect on the future performance of the Company are contained in its Annual Report on Form 10-K for the year ended June 30, 2015.

Non-GAAP Financial Measures
This press release contains non-GAAP financial measures. A non-GAAP financial measure is a numerical measure of a company’s financial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with Generally Accepted Accounting Principles (GAAP) in the United States in the statement of income, statement of comprehensive income, balance sheet, statement of cash flows, or statement of equity of the company. The non-GAAP financial measures contained herein include an adjustment for spin-off expenses. Reconciliations of the reported GAAP numbers to these non-GAAP financial measures are included in the financial highlights table below. Management believes it is useful for investors to understand how its core operations performed without the effects of the spin-off expenses. Excluding these amounts allows investors to meaningfully trend, analyze, and benchmark the performance of the Company’s core operations. Many of the Company’s internal performance measures that management uses to make certain operating decisions exclude these charges to enable meaningful trending of core operating metrics.

Conference Call / Webcast
 
 
 
Date:
 
November 5, 2015
Time:
 
10:00 AM Eastern Time
Dial-In #:
 
800-992-4934 (International Calls - 937-502-2251)
Conference ID:
 
56702561

The live webcast of the conference call can be accessed at investors.kimballelectronics.com. For those unable to participate in the live webcast, the call will be archived at investors.kimballelectronics.com.

About Kimball Electronics, Inc.
Recognized with a reputation for excellence, Kimball Electronics is committed to a high performance culture that values personal and organizational commitment to quality, reliability, value, speed, and ethical behavior. Kimball Electronics employees know they are part of a company culture that builds lasting relationships and global success for customers while enabling employees to share in the Company’s success through personal, professional, and financial growth.





Kimball Electronics trades under the symbol “KE” on The NASDAQ Stock Market. Kimball Electronics is a global contract electronic manufacturing services (“EMS”) company that specializes in durable electronics for the medical, automotive, industrial, and public safety markets. Kimball Electronics is well recognized by customers and industry trade publications for its excellent quality, reliability, and innovative service. From its manufacturing operations in the United States, Mexico, Thailand, Poland, China, and Romania, Kimball Electronics provides engineering, manufacturing, and supply chain services which utilize common production and support capabilities to a variety of industries globally. Kimball Electronics is headquartered in Jasper, Indiana.
To learn more about Kimball Electronics, visit: www.kimballelectronics.com.

Lasting relationships. Global success.




Financial highlights for the first quarter ended September 30, 2015 are as follows:

Condensed Consolidated Statements of Income
 
 
 
 
 
 
(Unaudited)
Three Months Ended
(Amounts in Thousands, except per share data)
September 30, 2015
 
September 30, 2014
Net Sales
$
200,418

 
100.0
%
 
$
203,803

 
100.0
%
Cost of Sales
185,138

 
92.4
%
 
185,900

 
91.2
%
Gross Profit
15,280

 
7.6
%
 
17,903

 
8.8
%
Selling and Administrative Expenses
8,359

 
4.1
%
 
10,116

 
5.0
%
Operating Income
6,921

 
3.5
%
 
7,787

 
3.8
%
Other Income (Expense), net
(666
)
 
(0.4
)%
 
(497
)
 
(0.2
)%
Income Before Taxes on Income
6,255

 
3.1
%
 
7,290

 
3.6
%
Provision for Income Taxes
1,780

 
0.9
%
 
1,899

 
1.0
%
Net Income
$
4,475

 
2.2
%
 
$
5,391

 
2.6
%
 
 
 
 
 
 
 
 
Earnings Per Share of Common Stock:
 
 
 
 
 
 
 
Basic
$
0.15

 
 
 
$
0.18

 
 
Diluted
$
0.15

 
 
 
$
0.18

 
 
 
 
 
 
 
 
 
 
Average Number of Shares Outstanding:
 
 
 
 
 
 
 
     Basic
29,292

 
 
 
29,143

 
 
     Diluted
29,349

 
 
 
29,143

 
 
 
 
 
 
 
 
 
 


Condensed Consolidated Statements of Cash Flows
Three Months Ended
(Unaudited)
September 30,
(Amounts in Thousands)
2015
 
2014
Net Cash Flow used for Operating Activities
$
(529
)
 
$
(4,505
)
Net Cash Flow used for Investing Activities
(11,114
)
 
(7,719
)
Net Cash Flow (used for) provided by Financing Activities
(694
)
 
7,827

Effect of Exchange Rate Change on Cash
(160
)
 
(1,162
)
Net Decrease in Cash and Cash Equivalents
(12,497
)
 
(5,559
)
Cash and Cash Equivalents at Beginning of Period
65,180

 
26,260

Cash and Cash Equivalents at End of Period
$
52,683

 
$
20,701







 
(Unaudited)
 
 
Condensed Consolidated Balance Sheets
September 30,
2015
 
June 30,
2015
(Amounts in Thousands)
 
ASSETS
 
 
 
    Cash and cash equivalents
$
52,683

 
$
65,180

    Receivables, net
132,363

 
139,892

    Inventories
132,566

 
125,198

    Prepaid expenses and other current assets
24,126

 
23,922

    Property and Equipment, net
112,940

 
106,779

    Goodwill
2,564

 
2,564

    Other Intangible Assets, net
5,033

 
4,509

    Other Assets
14,085

 
15,213

        Total Assets
$
476,360

 
$
483,257

 
 
 
 
LIABILITIES AND SHARE OWNERS’ EQUITY
 
 
 
    Accounts payable
$
127,450

 
$
133,409

    Accrued expenses
21,858

 
26,545

    Other
10,827

 
10,854

    Share Owners’ Equity
316,225

 
312,449

        Total Liabilities and Share Owners’ Equity
$
476,360

 
$
483,257





Reconciliation of Non-GAAP Financial Measures
 
 
(Unaudited)
 
 
 
(Amounts in Thousands, except per share data)
 
 
 
 
 
 
 
Operating Income excluding Spin-off Expenses
 
Three Months Ended
 
September 30,
Kimball Electronics, Inc.
2015
 
2014
Operating Income, as reported
$
6,921

 
$
7,787

Add: Pre-tax Spin-off Expenses
137

 
964

Adjusted Operating Income
$
7,058

 
$
8,751

 
 
 
 
 
 
 
 
Net Income excluding Spin-off Expenses
 
Three Months Ended
 
September 30,
Kimball Electronics, Inc.
2015
 
2014
Net Income, as reported
$
4,475

 
$
5,391

Add: After-tax Spin-off Expenses *
85

 
964

Adjusted Net Income
$
4,560

 
$
6,355

 
 
 
 
* Spin-off expenses in the prior year first quarter were non-deductible.
 
 
 
 
Diluted Earnings per Share excluding Spin-off Expenses
 
Three Months Ended
 
September 30,
Kimball Electronics, Inc.
2015
 
2014
Diluted Earnings per Share, as reported
$
0.15

 
$
0.18

Add: Impact of Spin-off Expenses
0.01

 
0.04

Adjusted Diluted Earnings per Share
$
0.16

 
$
0.22